One stock in the FTSE 100 that is popular with a lot of dividend investors is National Grid (LSE: NG), with its 4.2% yield. Another of the index’s dividend stocks that has been unpopular lately is WPP (LSE: WPP), with a yield of 3.9%.

I say WPP has been unpopular because a falling share price actually saw it relegated from the FTSE 100.

Eleven percent share price growth so far this year has recently seen WPP readmitted to the top flight index, but it is still 61% cheaper than five years ago.

By contrast, the National Grid share price has increased 41% during that period.

Both of these dividend stocks yield well above the current FTSE 100 average of 3.1% — but I only own one of them.

Shifting customer demand patterns matter

The one I own is WPP. I think understanding why I am happy to own that, but have no plans to buy National Grid shares, can be helpful.

Both shares have cut their dividends over the past few years. No dividend is ever guaranteed even when, as in National Grid’s case, the company explicitly aims to keep growing its annual payout per share at least in line with inflation.

Why did they cut their dividends? Both companies have struggled with changing business conditions.

In WPP’s case, the advertising landscape has been shifting dramatically as digital media’s role grows. AI now threatens to upend much of what the industry does.

It may be more surprising that National Grid’s marketplace has changed, as one attraction of power distribution is seemingly consistent, resilient demand. In fact though, the places where customers use energy have been moving – and so have the generation places, which need to be connected to the grid.

Updating the grid to reflect that is expensive, on top of the heavy capital expenditure needed to maintain the existing infrastructure.

Dividends don’t grow on trees

That matters because, in each case, such risks have eaten into cash flows – and cash flows are what enable a company to pay dividends.

National Grid has responded with the dividend cut, but also growing its debt. It ended its most recent financial year with net debt of £44.2bn, equivalent to 76% of its current market capitalisation.

WPP ended its first half with adjusted net debt of £2.9bn, around 70% of its current market capitalisation.

That is not much below National Grid’s indebtedness level, but WPP has been cutting its net debt. By contrast, I see a risk that ongoing capital expenditure could lead National Grid to raise its debt level.

Neither dividend looks highly secure to me, but I like WPP more. That is because, while it faces risks like National Grid does, I see more medium- to long-term growth opportunity.

AI could help WPP cut costs and it may ultimately also lead to clients placing higher value on human skill, something WPP has in droves.

To me, its share price fall in recent years means it now looks like a possible bargain to consider, whereas I do not think National Grid shares are attractively valued.

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Christopher Ruane owns shares in WPP.